Square Payment Pace Rises 25% in Niche Coveted by EBay

April 25 (Bloomberg) -- Square Inc., maker of credit-card
readers for smartphones and tablets, has increased its payment
volume 25 percent since March, when EBay Inc.’s PayPal showed
off a new mobile scanner and underscored growth in the field.

Square, founded in 2009, is processing transactions at an
annualized rate of $5 billion, up from $4 billion a month ago,
as more consumers embrace mobile payments, Chief Operating
Officer Keith Rabois said in an interview. The San Francisco
company is making cash from sales before 5 p.m. on any day
available in merchants’ accounts on the next business day,
compared with as many as five days out for other processors.

The market may top $170 billion in transactions by 2015, up
from about $60 billion last year, according to Juniper Research
Ltd. Square’s rivals include Intuit Inc. and Paypal, which has
said its mobile-payment volume will jump 75 percent this year to
$7 billion. To lure merchants, Square is speeding access to
funds.

“Sole proprietors and small businesses live and die by
their cash flow,” Rabois said in an interview. “They don’t
have access to capital; banks don’t give them loans. They need
to take the money they make today and use it to pay bills, buy
things and pay employees the next day, so having access to funds
is super-crucial for them.”

Square, which is closely held, was created by Jack Dorsey,
the co-founder of Twitter Inc. Investors in Square include
Sequoia Capital and Khosla Ventures.

Waiting for Money

Before the appearance of services such as Square, merchants
grew accustomed to waiting for credit-card payments to translate
into cash. Normally, a payment is evaluated for risk exposure,
transferred to the merchant’s bank and sent through a national
network, or automated clearinghouse, before it brings cash to a
seller’s account. That can take two to five days.

Square declines to say how it reduces the process to a
single day, citing competitive reasons. The company doesn’t
release its financial results, and won’t say whether it is
profitable.

Square’s technology enables U.S. businesses to handle
payments through Apple Inc.’s iPhone or iPad, or through devices
running on Google Inc.’s Android software. The card reader plugs
into the headphone jack of the mobile device. The reader,
introduced in 2010, is available at Wal-Mart Stores Inc., Target
Corp. and Apple outlets.

Payments processors are pushing deeper into the mobile-payment market with smartphone readers that allow merchants to
accept payments in any location. Last month, PayPal announced
PayPal Here, a device that competes with Square’s card reader.
It charges merchants 2.7 percent on transactions, less than
Square’s 2.75 percent.

Adding Staff

Both PayPal and Square accept cards from MasterCard Inc.,
Visa Inc., Discover Financial Services and American Express Co.
About 200,000 merchants have signed up for PayPal Here, EBay
said earlier this month.

More than 1 million are using Square to accept credit
cards, according to the company.

Square, is aiming to double its staff to 500 by the end of
the year. The company hired Ricardo Reyes as vice president of
communications and brand marketing earlier this month. Reyes
previously ran communications at Tesla Motors Inc. and Google’s
YouTube.